Monthly Archives: October 2009

Perhaps sensing their vulnerability in being painted as soft on fraud, Democrats on the Senate Judiciary Committee introduced a new healthcare fraud bill yesterday. The bill comes four days after the airing of a scathing 60 Minutes segment that has led to criticism that the government is not doing enough to control fraud and that healthcare reform lacks tough new controls.

The new bill, sponsored by committee chair Patrick Leahy (D-VT) and Sen. Ted Kaufman (D-DE), would expand the federal healthcare fraud act, increase penalties and increase anti-fraud spending $20 million per year. The proposed bill also would cover fraud against private carriers.

Hopefully, this bill will augment a proposed amendment Sen. Al Franken (D-MN) plans to introduce when the healthcare reform bill hits the Senate floor, and not replace it.

Here’s a summary of the new bill released by Leahy’s office yesterday:

Building on the fraud prevention efforts included in the Finance and Health, Education, Labor and Pension (HELP) Committee’s comprehensive health care reform bills, the legislation would further strengthen the government’s capacity to investigate and prosecute waste, fraud and abuse in both government and private health insurance. Officials from the Department of Health and Human Services and the Department of Justice testified Wednesday that health care fraud enforcement is a top priority of the Obama administration, which has taken steps to increase efforts to investigate and prosecute fraud.

“I am heartened by the significant and impressive steps the administration has already taken to step up health care fraud prevention and enforcement,” said Leahy. “I was glad to contribute to the efforts to include anti-fraud provisions in the Finance and HELP Committees’ health care reform bills. But I believe that we must do everything we can to ensure that those responsible for rooting out health care fraud have the tools they need. I was pleased to join Senator Kaufman to develop the anti-fraud measures in the Health Care Fraud Enforcement Act, and look forward to working to strengthen fraud enforcement tools as the Senate debates health care reform legislation.”
“Fraud perpetrated against both public and private health plans costs between $72 and $220 billion annually, increasing the cost of medical care and health insurance and undermining public trust in our health care system,” said Kaufman. “We all know that rooting out waste, fraud, and abuse, in both government and private programs, is critical to making health care reform work. The Finance and HELP committees have worked long and hard to find ways to bend the cost curve down. There’s more work to be done, however, and the Health Care Fraud Enforcement Act is an important part of that effort.”

The bill makes straightforward but critical improvements to the federal sentencing guidelines, to health care fraud statutes, and to forfeiture, money laundering, and obstruction statutes, all of which would strengthen prosecutors’ ability to combat this particularly destructive form of fraud. These improvements include:

o Sentencing increases: The bill directs the Sentencing Commission to increase the guidelines range for health care fraud offenses and clarifies that the full potential scope of the fraud should be considered at sentencing.

o Redefining “health care fraud offense”: The bill includes all health care crimes within the definition of “health care fraud offense,” regardless of where they are codified. (ERISA, drug marketing, and kickback crimes are currently not included) This change will make available to law enforcement the full range of antifraud tools, including criminal forfeiture and obstruction penalties, to combat these offenses.

o Improving whistleblower claims: Kickbacks lead to unnecessary and risky medical care and pervert the doctor-patient relationship. This bill clarifies that all payments made pursuant to illegal kickbacks are false for purposes of the False Claims Act.

o Creating a common-sense mental state requirement for health care fraud offenses: Some courts have held that defendants must be aware that their conduct violates a specific provision of criminal law in order to be held accountable. This bill restores the original intent of Congress that a person is guilty of a health care offense if he knowingly does what the law forbids.

o Increasing funding: Money spent on health care fraud prevention and enforcement is returned manifold through costs savings and civil and criminal recoveries. This bill authorizes a modest, yet significant, increase in federal antifraud spending of $20,000,000 per year through 2016.

The Obama Administration floated an idea today they should run with quickly — gathering up key fraud fighters from the federal government, states and private insurers to map out a coordinated and comprehensive strategy to combat medical fraud.

The idea of a national healthcare fraud summit was mentioned during testimony this morning before the Senate Judiciary Committee by William Corr, the number two official at the Department of Health & Human Services. He said they’d like to hold such a summit by the end of the year.

“A summit of this nature will bring fresh ideas and collaborations that we believe will result in more effective methods of preventing and detecting fraud,” Corr said.

We’ve been harping for some time that the federal government needs to reach out to private insurers (and vise versa) to share intelligence and develop a combined strategy to better detect, investigate and prosecute fraudsters who are milking both private and public insurance programs. This would be a great start.

During the hearing, Sen. Al Franken (D-MN) asked pointed questions of Mr. Corr and of Tony West, the Justice Department’s number two official, about why there isn’t better collaboration between the public and private sectors. Mr. West responded that his department has reached out, citing his speech before the coalition’s board in June. In that talk he did stress the need for more collaboration.

A summit would be a good next step forward in putting those words into action.

Last night’s 60 Minutes segment on medical fraud made for great tv. The piece featured an interview with a disguised fraudster, provided good footage of empty store-front medical suppliers that were billing millions and even included a minor confrontation with a Medicare anti-fraud manager about the lousy job she and the government are doing to combat fraud.

And there were no shortages of memorable quotes.

From an FBI agent: “We have seen cases in the last six, eight months that involve a couple of guys that if they weren’t stealing from Medicare might be stealing your car.”

From the fraudster, when asked how many people in Miami were actively involved in Medicare fraud: “I’d say at least 2,000 people.”

And on and on . . .

There wasn’t much new in the report for the anyone connected to the anti-fraud effort. These scams have been going on for a long time and now are becoming larger and bolder. Last week CNN published an online story under the headline “Organized crime’s new target: Medicare and Medicaid.” The only thing new is perhaps some in the federal government (and the news media) have just discovered organized crime’s tenacles reach deep into federal health insurance.

The focus on organized crime and medical fraud comes at an opportune time as Congress is getting deeper into a final healthcare reform proposal. We’re eager to see the bill that Sen. Harry Reid will soon send to the full Senate. Will it contain adequate anti-fraud firewalls? Don’t hold your breath.

For some inexplicable reason, Democrats have exposed themselves as being soft on fraud by not including tough anti-fraud provisions in health care reform. Following the 60 Minutes piece, conservative columnists and bloggers cited the loss of billions of taxpayers dollars as further evidence that the federal government can’t be trusted to expand current programs that are already mismanaged.

That’s even more reason Congress needs to get serious about anti-fraud measures in the upcoming bill.

Sen. Al Franken (D-MN) is considering offering an amendment when the bill hits the Senate floor to enhance the government’s anti-fraud efforts, including stepping up coordination among federal agencies, states and the private sector. He staked out his position in a letter to the Senate leadership last week, in which he wrote:

“Health reform will be incomplete without meaningful steps to attack fraud in health care . . . I am concerned that anti-fraud resources are uncoordinated and scattered through the public and private sectors.

Criminals do not distinguish between private and public insurance, and it is far more efficient to coordinate anti-fraud efforts than to pursue separate initiatives. We need inter-agency collaboration including the Department of Justice and Health and Human Services to exchange expertise and best practices related to the analysis, detection and prevention of fraud, waste and abuse in health care.”

Spot on. Let’s hope other Senators heed Sen. Franken’s call and enact tough-minded reforms that have the potential to make a greater dent on curbing fraud. Perhaps then, no one will accuse Democrats — or anyone in the federal government — of being soft on fraud.

Cases of suspected fraud are up across most lines of insurance throughout the U.S. at a time when anti-fraud resources seem to be declining. As the recession wears on and organized gangs become emboldened, fraud fighters are increasingly challenged with higher caseloads and fewer resources to combat this crime.

If ever there was a time for heighten public awareness efforts, this is it. Focused outreach to consumers can increase awareness of (1) what fraud is, (2) how severe it has become and (3) who ends up paying for it. And in the process, greater awareness serves to deter fraud, increases peer pressure against committing it and encourages people to report fraud.

The latest outreach effort was kicked off today in Michigan. Insurers in the state, insurance organizations and anti-fraud groups have team up to form the Michigan Insurance Fraud Awareness Coalition (MIFAC). At its inaugural news conference, the group said it will focus on arson-for-profit schemes that are plaguing the state. Part of the effort will include raising $1 to fund two arson investigators and an assistant prosecutor.

The effort got a boost as Michigan Governor Jennifer Granholm offically declared Oct. 11-17 “Insurance Fraud Awareness Week.” MIFAC has launched an impressive website and has plans to keep this effort going long after the headlines of this week fade.

Congratulations to the Michigan chapter of the International Association of Special Investigation Units for spearheading this new campaign.

Other states should look to sponsor efforts to reach out to the public and keep the fraud issue in the forefront. Campaigns like the ones in Pennsylvania, New York and Virginia have produced good results that have supported the overall mission to curb fraud.

The current campaign by the Pennsylvania Insurance Fraud Prevention Authority is the most polished and aggressive in the country. Television ads, billboards and other media are helping to deter fraud by everyday citizens so insurers and law enforcement can focus their resources on fraud by organized rings. That’s smart use of resources that helping to keep insurance crime — and insurance premiums — in check.

As incidents of fraud increase in this down economy, let’s hope more states step up to the plate.